Forex Shortage Likely to Persist Over Polls – Coronation

A prediction by Coronation Merchant Bank has suggested that the foreign exchange liquidity crisis affecting the economy will persist for some time.

The Chief Economist of Coronation bank, Chinwe Egwim revealed this via a statement on Wednesday while speaking on the launch of its 2023 Economic Review and Outlook report which focuses on trends for core macroeconomic indicators and relevant emerging policy themes that will shape 2023.

In the report titled Baton Hand-Off: Economic Headwinds and Expected Resilience, Egwim predicted that 2023 brings with it a mix of economic conditions.

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She stated that the current inflation trend might persist in both advanced and emerging economies.

“The resultant effect of monetary policy tightening is also expected to continue but at a reduced pace given the inflation outlook across markets which points towards gradual moderation in H2 2023.

“For Nigeria, FX liquidity constraints are likely to continue in the near term. It is an election year, there are concerns around demand-pull inflation on the back of expected spending (naira circulation) associated with electioneering.”

However, Egwim explained that the implementation of the recent naira redesign policy could assist with abating this inflation risk.

According to her, “there are also concerns around policy continuity post-election, as well as an expected lull in economic activity on the back of the transition phase. Nigeria’s GDP growth is expected to maintain its growth trajectory but at a relatively slower pace in 2023.”

The report which covers global economic headwinds and growth trends, inflationary pressures and expectations, dynamics in the domestic oil market, exchange-rate expectations, thoughts around monetary and fiscal policies and sectoral trends, among others analysed the impact of global economic shock in Nigeria.

Commenting on the report, the MD/CEO of Coronation Merchant Bank, Banjo Adegbohungbe, stated that “The impact of recent global economic shocks on the Nigerian economy were prevalent in 2022 and are expected to persist in 2023.

“However, there will be opportunities to unlock new growth, particularly in the second half of the year. This report is a potent tool for decision makers which would assist our clients, investors and stakeholders to better navigate the current economic environment and achieve their respective strategic goals.”